Cologne's drive to become start-up hotspot

Long a centre for traditional businesses, Cologne is determined to make itself a leading destination for start-up and tech firms. The potential for collaboration between these old and new industries could be what gives the city an edge over its rivals, finds Natasha Turak

Historically a centre for industry and manufacturing, Cologne’s embrace of the digital age is carrying it forward as one of Germany’s fastest-growing cities for start-ups and technology. This is helped in no small part by the fact that Cologne is also the country’s media capital, home to six television stations, nine radio stations, 35 publishers and more than 50 independent production studios. Combined with the several thousand financial services companies located in the city, Cologne’s business landscape – and the surrounding area of the Rhine-Ruhr metropolitan region, which includes Düsseldorf, Dortmund, Essen, Bonn, and smaller cities – provides a rich market for digital innovation and tech start-ups.

“A significant goal in the next few years is to make Cologne one of the leading start-up hotspots in Germany alongside Berlin,” says Ute Berg, Cologne’s deputy mayor for economic development and real estate. While already benefiting from strong business sectors and the brain power of the University of Cologne, the city is not resting on its laurels. Key public and private players have come together to create a collaborative platform in an effort to boost digital industry growth. “Following the successful application for subsidies from the federal state government of North Rhine-Westphalia for the creation of a ‘Digital Hub Cologne’,” Ms Berg continues, “the city’s administrative authority, chambers as well as its scientific and economic institutions are well on the way to making our city the premier digital hub in western Germany.”

Digital Hub Cologne GmbH was established as an initiative between the City of Cologne, the Chamber of Commerce (CCI) and the University of Cologne “to sustainably strengthen the regional economy by the ability to digitise”, according to its website. A brand new business accelerator, it aims to act as a bridge to connect SMEs with innovative digital startups in the region and internationally to help develop new products and services. “Cologne wants to defend its digital top position in North Rhine-Westphalia and to catch up with Berlin, Munich and Hamburg,” the website states as its aim.

Opportunity

Small to medium-sized businesses are often behind when it comes to digitisation; Cologne sees a market gap which it aims to fill, in turn strengthening the competitiveness of its local economy. Already, the city is home to nearly 1000 start-ups employing more than 13,000 people.

“The digitisation is not only changing entire branches of industry and large areas within companies. It is also decisive for their future development,” Ms Berg explains. “Cologne as a city pulls out all the stops to set optimal framework conditions for successfully shaping the digital transition of Cologne as a business hub.”

This includes hosting events, providing grants, and building incubators for the city’s many budding start-ups. StartPlatz is an accelerator and co-working facility in Cologne’s media park providing office space, training workshops and a thriving network of neighbouring digital media companies for its tenants. Other local incubators include WHB Ventures, which works with start-ups in digital publishing; Betafabrik, which provides support for financing and implementation of business ideas; and Gateway, based in the University of Cologne and founded by and for scientists and students.

Cologne-born start-ups are many and varied, crossing the retail, media, communications and financial services sectors, among others. Included are online shopping portal Hitmeister, virtual dictionary Linguee, social app Qeep, financial technology tool TrustedShops which delivers digital seals of approval for web retailers, online art platform Fotocommunity, and insurance technology innovator Insurance AI, which aims to modernise the insurance industry using artificial intelligence – to name just a few.

Collaboration

“The start-ups need clients and the businesses need digital solutions, and these are both strong in Cologne – that’s our big advantage,” says Ulf Reichardt, general manager of the CCI. “Compared to Berlin, for example, they have many start-ups but they’re lacking the classical industry. And these start-ups need clients and industry to do business with. We have both, so what we need to do now is lift the potential that comes from that collaboration.”

International start-up accelerator network StartupBootCamp held its 2016 “Pirate Summit” in Cologne in July – a wild gathering held in a scrapyard-turned-outdoor art gallery involving more than 650 start-up founders competing for funding from 250 investors, corporate leaders and media executives. InsurTech, FoodTech, DataTech and Internet of Things visionaries were out in force, while DJs, pop-up bars, and guests in pirate costumes certainly made the event an original one.

Cologne’s famous Koelnmesse exhibition hall hosts DMEXCO, an international conference showcasing global digital marketing and media trends, new industry ideas, and networking opportunities with executives from the likes of Facebook, Google, Twitter, Amazon and more. Koelnmesse is also the site of Gamescom, a massive games business fair held by the German branch of American gaming company Electronic Arts (EA). The event attracts more than 635 exhibitors from 40 countries and nearly 350,000 visitors each year.

“There’s a lot going on in Cologne,” says Mehrdad Pirozraam, a venture capitalist in financial and insurance technology who first came to Germany from Iran in 1979. “The ecosystem is the hand-in-hand play between governmental bodies like the city and the chamber and big corporate players. Working close to banks and insurers, for start-ups, is a huge win for Cologne and a huge win for the start-ups.”

Despite all this, Cologne still needs to work on projecting its image, Mr Pirozraam argues. Essential to maintaining an innovative edge is attracting young talent. “Cities like London and Berlin are sexy and hip for young people,” he says. “You need to have a really different, unique pitch because you can’t compete with ‘cool’ cities. Let’s find areas where we are strong and develop them into the next generation.”

With yearly increases in established start-ups, university graduates, employees in digital industries, and high-profile events and initiatives, Cologne appears on the right track to cultivate that strength and maintain its momentum.

Corporate location benchmarking tool

fDi Benchmark is the only online tool to benchmark the competitiveness of countries and cities in over 50 sectors. Its comprehensive location data series covers the main cost and quality competitiveness indicators for over 300 locations around the world.